Bloomberg News

Cameron Rules Out New Council-Tax Banding

November 19, 2012

U.K. Prime Minister David Cameron has ruled out raising revenue by setting new top-range bands for levies on residential property, known as council tax, his spokeswoman said.

“We don’t think that people who have saved up hard to buy a home should be hit with a mansion tax, and we have no plans to introduce new council-tax bands either,” Vickie Sheriff told reporters in London today. Chancellor of the Exchequer George Osborne is scheduled to update lawmakers on his fiscal plans in a statement to Parliament on Dec. 5.

Business Secretary Vince Cable, a Liberal Democrat member of Cameron’s Conservative-led coalition, indicated yesterday that some kind of property levy is being considered by the parties for inclusion in Osborne’s statement as the “obvious” place to look for revenue.

The poorest 20 percent of U.K. households pay 5.6 percent of their total income in council tax, three times the proportion the wealthiest 20 percent contribute, according to a study by Michael Orton, a researcher at the University of Warwick. That disparity has prompted Liberal Democrats to push for a mansion tax of 1 percent a year on homes valued at more than 2 million pounds ($3.2 million). The Conservatives have rejected the idea.

“One of the reasons it’s the obvious place isn’t simply that it’s fairer; it’s that property can’t run off to Monaco and Lichtenstein,” Cable told the BBC’s “Andrew Marr Show” yesterday. “As with so many of these things, the devil is in the detail. But it is right that we do tax wealth.”

‘Broadest Shoulders’

Asked today if Osborne would be looking at increasing stamp duty, a levy on house sales, Sheriff said that “the chancellor will be looking at all these issues in the autumn statement. Those with the broadest shoulders should bear the greatest burden.”

Conservative London Mayor Boris Johnson called on Osborne today not to raise council tax on London houses.

“We should have taxes that are low but fair, and it is absurd to be suddenly whacking up taxes on cash poor people who happen to inhabit expensive houses in London when firms like Google are paying zero,” Johnson told the Confederation of British Industry’s annual conference in London.

To contact the reporter on this story: Kitty Donaldson in London at kdonaldson1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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